Word: petroleum
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Only a few months ago, the British government turned to Kuwait as a savior. Under Prime Minister Margaret Thatcher's grand privatization plan, the government had been ready last October to sell its 32% stake in British Petroleum to the public. Then stock markets around the world crashed. Since the BP shares had been priced far above their postcollapse market value, it seemed certain that few investors would buy them. Enter the Kuwait Investment Office, the London-based agency of Kuwait's Finance Ministry that handles the bulk of the Arab country's overseas holdings. Beginning in early November...
These days, though, 10 Downing Street must be wondering if the Kuwait Investment Office is friend or foe. Reason: the Kuwaitis are still buying BP shares -- with an enthusiasm that has raised suspicions in Britain. Kuwait has spent some $1.9 billion, bringing its stake in British Petroleum up to 22%, to become BP's largest shareholder. The Kuwaitis insist that they will not seek a seat on BP's board. They initially promised not to raise their stake above 22.5%, but Fauad Jaffar, deputy chairman of KIO, seemed to waffle on that pledge during a recent television interview. Said...
...portfolios. Unlike Saudi Arabia, which has poured many of its petrodollars into grand domestic projects, Kuwait has invested most of its income overseas. The country holds $85 billion worth of stocks, bonds and real estate in the U.S. and Europe. Kuwait's overseas holdings provided a comfortable cushion when petroleum prices collapsed two years ago; in fact, the country earns more from investments than from oil exports...
...past, the Kuwaitis have acted as passive investors, shunning public attention. That could change in the case of British Petroleum. Whatever the Kuwaitis do with their stake in Britain's oil company, they will attract the closest kind of scrutiny...
...even those maverick producers seem ready to consider tightening their spigots. Last week in London, petroleum experts from non-OPEC countries met in an emergency session to discuss ways to mop up the glut. But OPEC is unlikely to follow suit. Saudi Arabia's Hisham Nazer and other oil ministers seem hesitant to discuss cutbacks, since some OPEC members flout existing quotas...